There Are California Real Estate Laws You Should Know

There are far more real estate laws in California than we can cover here. But consider the following list as a primer to get you started:

Due Date and Tax Year

By California law, the tax year runs from July 1 through June 30 and taxpayers are required to pay their property tax bill in two installments. The first due date is December 10th and the second is April 10th.

A tax bill that runs overdue results in a penalty of 10%, with an additional 1.5% per month redemption fee based on the amount owed.

If an overdue tax remains unpaid for five years, the local tax collector is permitted, by law, to begin the process of selling the property in order to collect past-due taxes and penalties.

Exemptions

California does allow certain exemptions from property taxes. Full or partial exemptions are provided to veterans, schools, and churches.

But every homeowner in the state is also allowed an exemption that subtracts $7,000 from the assessed value of the home before it is multiplied by the tax rate.

Frequently this exemption is registered automatically when a home changes hands. In this case, it’ll show up on the first tax bill.

If it doesn’t show up though, the new homeowner can file for the exemption at the county tax assessment office, but no later than the deadline for assessment appeals.

The exemption carries over automatically year to year.

Proposition 13

If you don’t live in California, you may not have heard of Proposition 13. But here’s the thinking behind it.

As a rule of thumb, when home values go up, so too do property taxes.

When California property values climbed during the 1970s, property owners who had low to moderate income, or who were retirees, could no longer afford the increased taxes on their homes.

So Proposition 13 was adopted to freeze the basic tax rate and limit the assessed value of the property to the value at sale, plus no more than 2% per year.

California Homestead Laws

When times get tough and there’s economic strife, homeowners and small property owners run the risk of losing their properties.

Homestead protection laws protect these owners from being left homeless during these times. They do this by allowing individuals to declare a portion of their property as “homestead” and therefore mostly off-limits to creditors.

Under California homestead laws, property owners are able to declare at least $75,000 worth of their property as a protected homestead in a bankruptcy proceeding or when actions are being taken by creditors.

Adverse Possession

There is a notion that land should not sit idle.

So when someone publicly moves into and improves a neglected property, California real estate laws say that he or she may acquire the title after a certain amount of time.